Music’s We7 Funded To Be ‘European Pandora’

Peter Gabriel, Eden and Qualcomm’s Pentech are chipping in again to finance UK streaming music service We7, as it tries to fend off mounting threats from Spotify, Apple (NSDQ: AAPL) and the growing throng of competitors.

The money is needed to finance European expansion and the UK operation. We7 CEO Steve Purdham hints: “Over the coming months, We7 will be announcing key partnerships alongside expansion plans into Europe. These developments will allow us to showcase what We7 can do by expanding the familiar medium of radio as a digital backbone to additional services we’ll be offering.”

Could one such partner be Yahoo? The portal already sells ads for We7. In the U.S., *Yahoo* Music runs personalised radio powered by CBS (NYSE: CBS) Radio’s Last.fm and on-demand songs through a Rhapsody player. Although Yahoo (NSDQ: YHOO) runs music through Deezer in France, it has no such features in other parts of Europe, like the UK.

“I think doing it yourself and white labelling partnerships are diminishing, but there is significant scope for co-branding partnerships and working with companies who have significant user bases who love music and are looking for the halo effect for customer acquisition and retention,” Purdham tells paidContent.

Last winter, with the local market for on-demand streaming becoming crowded by Spotify, We7, which operates on the web and in mobile apps, repositioned slightly to make more of its Pandora- or Last.fm-style personalised radio service, which streams tracks its algorithms think listeners might like, based on their initial listening selections.

“Seeing We7 as a European Pandora (NYSE: P) Plus is definitely the right idea,” Purdham tells paidContent. “We started the transition last September and you will see in the next 90 days the final leaps to make that happen. The will be clear separation with Personal Radio Plus requests being ad-supported and targeted at the mass of music listeners and full on-demand service for music fanatics which will be subscription-based.”

So much of has the discourse been dominated by the big boys in online music (don’t mention the “S” word), We7 is rarely mentioned, but counts seven million monthly web uniques. In November, 10 months after introducing premium subscriptions, We7 counted paying customers in the “low thousands” and it’s still “not massive”.

“Our UK demographics are primarily 16-34 with people who subscribe in our user base being males over 34,” Purdham tells paidContent. “Our focus in Europe will enhance subscription, we believe, and we expect stronger growth as the demographic is not expected to be so polarised.”

Peter Gabriel originally funded the company in 2007 and 2008, in a $3 million first round including Eden and Spark. The original idea, to embed 10-second ads in free MP3 downloads, was discarded along the way. This is a third round, the second having come in 2010.